Key facts
- Kilroy Realty's Oyster Point life sciences campus in South San Francisco has its second phase 49% leased and 7% occupied.
- The first phase of the 865K SF campus is 100% leased.
- Olema Pharmaceuticals signed a 38K SF lease in Phase 2 during the second quarter.
- Kilroy CEO Angela Aman noted that lease execution timelines remain elongated but expressed optimism about life science demand.
- Life sciences tenants constitute 19% of Kilroy's portfolio by rent and 17% by square footage.
- Kilroy's overall stabilized portfolio was 77% occupied and 81.5% leased at the end of the second quarter.
The second phase of Kilroy Realty's Oyster Point life sciences campus in South San Francisco is experiencing a slow leasing pace, with 49% of the space leased and only 7% occupied. This contrasts with the first phase of the 865,000-square-foot campus, which is fully leased.
Olema Pharmaceuticals recently signed a seven-year lease for 38,000 square feet in Phase 2. Kilroy CEO Angela Aman stated during the company's second-quarter earnings call that while lease execution timelines remain extended, there is interest in the remaining unleased space and overall demand for life science properties is strong.
Life sciences tenants accounted for 19% of Kilroy's rental income and 17% of its square footage in the second quarter. Tech tenants continue to form the largest segment of the company's portfolio. Across its life sciences and office portfolio, Kilroy signed approximately 376,000 square feet of new and renewal leases in the second quarter, including a 51,000-square-foot lease with Universal Music Group at the Santa Monica Media Center, bringing that project to full occupancy.
Aman also noted positive leasing activity in the South Bay to Long Beach area for defense, aerospace, and robotics sectors. Kilroy faces significant lease expirations in Los Angeles next year, with a retention rate of 27.9% in the last quarter. The company is exploring options for the nearly 533,000-square-foot DirecTV lease expiration in El Segundo.
Overall, Kilroy's stabilized portfolio was 77% occupied and 81.5% leased at the end of the second quarter, a slight decrease from the prior period. The company is also in discussions with the city of San Francisco regarding potential residential uses for its Flower Mart mixed-use project.